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Business Succession Planning

for Small Business Owners in Kansas and Missouri

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It would be an understatement to say that family businesses are the backbone of the American economy. Some 90 percent of all businesses in this country are either family-owned or family-controlled. They come in all shapes, sizes and colors, representing all sectors of our economy. From agriculture to services, technology and manufacturing, family businesses generate an estimated one-half of the U.S. Gross National Product and pay half of all wages earned in this country.

Not all family businesses are traditional small businesses either. In fact, about one-third of all businesses included in the Fortune 500 are family businesses. But not all of the family business statistics are rosy.

Family businesses tend not to outlive their founders. At any given moment, 40 percent of family businesses are in the process of transferring their ownership. Unfortunately, two-thirds of all initial transfers fail. Of the one-third that survives an initial transfer, only one-half will survive a second transfer.

Be sure to download our Free Report: Business Owner Blues

Why Family Businesses Do Not Survive

Why such a dismal success rate? The reasons are as varied and unique as the businesses and business owners themselves. Nevertheless, many of the failed transfers can be traced to three causes: people, taxes and cash.

Family Business Owners and Estate Planning for the Family

The family element in every family business can mean the difference between its success or failure during the transfer process. The retirement, disability or death of the business owner are all common events that can trigger a business transfer.

Tough questions must be asked and answered. Otherwise, a business that took decades to build can be destroyed overnight.

For example, who will run the business after you? Will it be your spouse, one of your children or a non-family member key employee? If your spouse will not run the business, will he or she still be financially dependent on it... or can you make arrangements to ensure they are financially independent of it?

What arrangements have you made for the inheritance of your children who are not active in the business? Have you in-law proofed your estate?

Thinking ahead to the second-generation transfer of your business, what provisions have you made to encourage thrift and industry among your grandchildren?

Estate Tax Uncertainty

The only certainty about the federal estate is its uncertainty with each change in Congress and the White House. Additionally, some states now impose their own estate taxes, independent of any federal estate taxes.

Accordingly, careful monitoring of the economic, political and legal climate is required. Why? Without proper estate-liquidity planning, your family may have to sell the business just to meet an estate tax cash call.

Estimate the Estate Tax Liability of Your Family Business with our Estate Tax Calculator

Knowing potential estate tax liability for your family-owned business is a great place to start your business succession plan. Use our estate tax calculator to estimate the estate tax liability for your family business. (Enter the estimated value of your business ownership interest in the field for stocks.)

Click here to use
the Estate Tax Calculator

Overland Park Estate Planning Attorney Kyle Krull assists clients in Kansas and Missouri with Estate Planning, Wills, Trusts, Revocable Living Trusts, Charitable Planning, Probate and Estate Administration, Asset Protection and Business Succession Planning in the greater Kansas City area including Overland Park, Leawood, Olathe, Lenexa, Johnson County Kansas and Jackson County Missouri.

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